CIHM 
Microfiche 
Series 
(IMonograplis) 


ICIMH 

Collection  de 
microfiches 
(monographies) 


Canadian  Inttituta  for  Historical  IMicroraproductions  /  institut  Canadian  da  microraproductions  historiquas 


Technical  and  Bibliographic  Notes  /  Notes  techniques  et  bibliographiques 


The  Institute  has  attempted  to  obtain  the  best  original 
copy  available  for  filming.  Features  of  this  copy  which 
may  be  bibliographically  unique,  which  may  alter  any  of 
the  images  in  the  reproduction,  or  which  may 
significantly  change  the  usual  method  of  filming  are 
checked  below. 


a 


Coloured  covers/ 
Couverture  de  couleur 


□  Covers  damaged  / 
Couverture  endommagte 

□   Covers  restored  and/or  laminated  / 
Couverture  restaurde  et/ou  pellicuMe 

Cover  title  missing  /  Le  titre  de  couverture  manque 

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I      I   Coloured  ink  (i.e.  other  than  blue  or  black)  / 


Encre  de  couleur  (i.e.  autre  que  bleue  ou  noire) 

Coloured  plates  and/or  illustrations  / 
Planches  et/ou  illustrations  en  couleur 


D 
D 
D 


D 


D 


Bound  with  other  material  / 
Reli6  avec  d'autres  documents 

Only  edition  available  / 
Seule  Mition  disponible 

Tight  binding  may  cause  shadows  or  distortion  atong 
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Tombre  ou  de  la  distorsion  le  long  de  la  marge 
intdrieure. 

Blank  leaves  added  during  restorattons  may  appear 
within  the  text.  Whenever  possible,  these  have  been 
omitted  from  filming  /  II  se  peut  que  certaines  pages 
blanches  ajoutdes  tors  d'une  restauration 
apparaissent  dans  le  texts,  mais,  lorsque  cela  6tait 
possible,  ces  pages  n'ont  pas  6\6  filmdes. 

Additional  comments  / 
Commentaires  suppldmentaires: 


L'Institut  a  mk:rofilm6  le  meilleur  exemplaire  qu'il  lui  a 
M  possible  de  se  procurer.  Les  d^ils  de  cet  exem- 
plaire qui  sont  peut-Atre  unk|ues  du  point  de  vue  bibli- 
ographk)ue,  qui  peuvent  modifier  une  in^ge  reproduite, 
ou  qui  peuvent  exiger  une  modifk»tk)n  dans  la  metho- 
ds nonrtale  de  filmage  sont  indk|u6s  cinJessous. 

I     I  Cotoured  pages/ Pages  de  couleur 

I I  Pages  damaged  /  Pages  endommagtes 

□   Pages  restored  and/or  laminated  / 
Pages  restaurtes  et/ou  pellk:ul4es 

r^  Pages  discotoured,  stained  or  foxed/ 


Pages  d^cotortes,  tachetdes  ou  pk^u^es 


\~1 


I I  Pages  detached/ Pages  d^tach^s 

Showthrough  /  Transparence 


3 

I     I  Quality  of  print  varies  / 


D 
D 


D 


Quality  in^gale  de  I'impresston 

Includes  supplenwntary  material  / 
Comprend  du  materiel  suppl^mentaire 

Pages  wholly  or  partially  obscured  by  errata  slips, 
tissues,  etc.,  have  been  refilmed  to  ensure  the  best 
possible  image  /  Les  pages  totalement  ou 
partiellement  obscurcies  par  un  feuillet  d'errata,  une 
pelure,  etc.,  ont  6X6  film^es  k  nouveau  de  fa^on  k 
obtenir  la  meilleure  image  possible. 

Opposing  pages  with  varying  colouration  or 
discolourations  are  filmed  twice  to  ensure  the  best 
possible  image  /  Les  pages  s'opposant  ayant  des 
colorations  variables  ou  des  decolorations  sont 
film^es  deux  fois  afin  d'obtenir  la  meilleure  image 
possible. 


This  Ham  !•  f  ilnwd  at  Mm  raduetion  ratio  ehaeind  balow  / 

C«  doeummt  Mt  fiim4  au  taux  da  rMuetion  Indiqu*  oi-daasous. 

lOx                            14x                           18x 

22x 

26x 

30x 

>/ 

12x 

16x 

20x 

24x 

28x 

32x 

TiM  copy  (ilmad  h«r«  has  b««n  raproduead  thanks 
to  tha  s«(M'0*<<V  9i: 

National  Library  of  Canada 


Tha  imagaa  appaaring  hara  ara  iha  bast  quality 
pessibia  conaMaring  tha  condition  and  lagibility 
of  tha  original  copy  and  in  kaaping  with  tha 
filming  contract  spacif icationa. 


Original  copiaa  in  printed  papor  covers  ara  fUmad 
baginning  with  tfta  front  covar  and  anding  on 
tha  laat  paga  with  a  printad  or  illustratod  imprao* 
sion.  or  tha  back  covar  whan  appropriata.  All 
other  original  copiaa  ara  filmed  beginning  on  the 
first  paga  with  a  printad  or  illuatrated  impraa- 
sion.  and  anding  on  tha  last  paga  with  a  printad 
or  Ulyauatad  impression. 


The  last  recorded  frame  on  each  microfiche 
shoU  contain  the  symbol  «^  (meaning  "CON- 
TINUED"), or  the  symbol  V  (meaning  "END"). 
«vhichovar  appliaa. 

Maps,  plates,  charu.  etc.,  may  be  filmed  at 
different  redjction  ratios.  Those  too  large  to  be 
entirely  included  in  one  axposurs  sre  filmed 
beginning  in  the  upper  left  hand  corner,  left  to 
right  and  top  to  bonem,  —  msny  frames  ss 
required.  The  following  diagrams  illuswata  the 
method: 


1  2 

4  S 


L'axMnplair*  f Ufn4  f ut  raproduit  gric*  A  la 
8*n*ro«it*  da: 

BibliothaqiM  nationala  du  Canada 


Las  imagas  suivantaa  ont  Ati  raproduitas  avac  la 
plus  grand  soin.  eompta  tanu  da  la  condition  at 
da  la  nanat*  da  Taxamplaira  film^.  at  an 
conformita  avac  iaa  conditions  du  contrat  da 
fUmaga. 

Laa  aKamplairaa  originaiM  dent  la  ceuvartura  an 
papiar  ast  imprimaa  sont  filmOs  w%  eemmancant 
par  la  pramiar  plat  at  an  tarminant  soit  par  la 
darniira  paga  qui  comporta  una  amprainta 
d'imprasaJen  ou  d'iUuatration.  soit  par  la  sacond 
plat,  salon  la  cas.  Toua  laa  autras  asamplairas 
orlgirtaux  sont  fUmAs  an  eommancant  par  la 
pramiAra  paga  qui  comporta  una  amprainta 
dimpraasion  ou  d'illustration  at  an  tarmirtant  par 
la  damiira  paga  qui  comporta  una  taila 
amprainta. 

Un  daa  symbolaa  suivants  apparaitra  sur  la 
darniira  imaga  da  chaqua  microfiche,  salon  la 
cas:  la  symbols  ^  signifia  "A  SUIVRE".  la 
symbola  ▼  signifia  "FIN". 

Laa  cartaa.  planchas.  tablaaux.  ate.  pauvant  atra 
filmia  i  daa  ttux  da  reduction  diffirants. 
Lorsqua  la  document  ast  trap  grand  pour  atra 
raproduit  mn  un  saul  clichi.  II  ast  f  ilmS  S  partir 
da  I'angla  sup^riaur  gaueha.  da  gaucha  a  droita. 
at  da  haut  an  baa.  an  pranant  la  nombra 
d'imagaa  ndcassaira.  Las  diagrammas  suivants 
illustrant  la  mOthodo. 


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(ANSI  and  ISO  TEST  CHART  No.  2) 


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Reprinted  from  The  Annate  of  the  American  Aeademy  of  Political  and 
Social  Science,  Philadelphia,  March,  19lS. 


MUNICIPAL  TAXATION  IN  RELATION  TO  SPECULATIVE 

LAND  VALUES 

Bt  Aoasi  SHoirrr, 
Civil  Service  ConuniMion  of  Canada. 

Whatever  may  be  said  of  the  ultimate  basis  of  national  or  state 
and  provincial  taxation,  municipal  taxation,  at  least,  is  essentially 
baaed  upon  the  fact  that  where  increasing  numbers  of  people  find  it 
necessary  to  live  together  in  a  more  or  less  limited  area,  it  is  essential 
for  elementary  safety  and  comfort  that  they  should  undertake  to 
maintain  certam  services  in  common.  These  needs  expand  with  the 
increasing  size  of  the  civic  centre  and  the  developing  wants  of  the 
citizens.  After  providing  for  the  primary  and  more  indispensable 
needs,  there  naturally  arises  the  desire  to  provide  for  secondary  and 
higher  needs.  Organized  society,  as  Aristotle  put  it,  comes  into 
existence  to  make  life  possible  and  continues  and  develops  in  order 
to  make  life  good. 

In  any  considerable  centre  of  population  it  is  plain  that  there 
must  be  cooperation  in  providing  for  the  supply  of  those  primary 
needs  previously  so  easily  satisfied,  if  felt  at  all,  in  the  open  freedom 
of  the  country.  Chief  of  these  are  pure  water,  drainage  and  sanita- 
tion, suitable  highways  for  constant  traffic,  equipment  for  the  pre- 
vention of  fires  and  for  the  general  police  protection  of  life  and 
property.  While  these  primary  needs  are  in  process  of  being  met, 
various  secondary  needs  emerge,  such  as  the  need  for  schools,  Ubraries, 
parks,  the  regulation  of  buildings,  and  other  measures  to  improve,  on 
the  one  hand,  the  atmosphere  of  civic  life  and,  on  the  other,  its 
intellectual  and  artistic  quality.  In  a  modem  community,  making 
any  claim  to  be  ranked  as  civilized,  its  individual  members  cannot 
be  left  to  make  voluntary  provision  for  the  supply  of  these  very 
essential  needs,  such  provision  must  be  placed  at  the  service  of  every 
member  of  the  community,  whether  he  may  or  may  not  be  able  to 
make  a  proportionate  contribution  towards  the  necessary  outlay. 
Thus  the  taxes  which  are  le^^ed  to  sustain  the  various  civic  depart- 
ments cannot  be  regarded  as  payment  for  services  rendered,  on  any 
basis  of  economic  exchange,  but  as  a  necessary  contribution  towards 
a  public  charge  which  must  be  met  as  a  civic_duty.    At  the  same  time 

1 


Thb  AmrAU  or  the  Amsbican  AcAonrr 


the  lerying  of  a  civic  tax  should  not  be  open  to  the  charge  of  injustice 
or  unfairness  from  the  point  of  view  <rf  individuals  having  similar 
obligations  and  similar  capacities  to  meet  them. 

On  the  other  hand.weU  ascertained  pubUc  opinion  on  the  grounds 
of  economic  service  mj<y  support  the  policy  of  providing  citizens  with 
a  street  car,  or  telephone  service,  or  the  supply  of  light,  heat,  or 
p«)wer,  in  such  forms  as  electricity  or  gas.  These  services,  however, 
cannot  be  supplied  on  the  same  basis  as  police,  or  fire  protection,  or 
general  sanitation.  However  convenient  or  even  essential  when 
once  established,  such  services  must  be  supported  by  those  who 
directly  benefit  by  them,  on  the  same  principles  of  exchange  as  would 
apply  to  their  provision  by  private  in<  ii  viduals  or  corporations.  The 
very  difFercnt  grounds  on  which  contributions  are  made  by  the  citi- 
lens  to  the  support  of  a  fire  department  and  an  electric  light  depart- 
ment indicate  the  essential  distinction  between  municipal  taxation 
and  ordinary  exchange  payments  for  services  rendered.  An  indi- 
vidual ciiizen  may  be  givet^  the  option  of  walking  to  his  place  of  busi- 
ness or  riding  in  a  civic  tram,  but  cannot  be  given  the  option  of 
leaving  his  house  unprotected  against  fire  while  his  neighbor  is  so 
protected.  If,  then,  some  citizens  are  una.Je  to  meet  their  full  share 
of  the  cost  of  fire  protection,  other  citizens  must  contribute  more  than 
their  proportion  of  this  cost.  The  question  therefore  arises,  on  what 
basis  should  compulsory  taxes  be  levied,  as  contrasted  with  the 
voluntary  exchange  pajrments  for  civic  services? 

Without  arguing  the  matter  in  detail,  it  may  be  fahly  claimed 
that  the  only  practical  basis  of  regular  civic  taxation  i"  the  basis  of 
ability  to  pay;  and  ability  to  pay  necessarily  rests  upou  e  average 
net  income  enjoyed  by  the  individual  citizens,  whether  singly  or  in 
corporations.  But,  while  ability  to  pay  is  dependent  upon  income  as 
a  permanent  condition  of  tax  paying,  it  is  often  very  difficult  to  deter- 
mine net  income,  especially  where  capital  is  employed,  not  in  a  fixed 
form,  but  largely  as  fluid  or  exchange  capital:  while  the  difference 
between  the  outgoing  and  incoming  stream  is  the  only  indication  of 
net  income. 

In  all  normal  forms  of  taxation,  whether  based  upon  ability  to 
pay  or  not,  few  practical  distinctions  can  be  made  as  between  incomes 
acquired  as  the  result  of  exceptional  personal  quality  or  close  atten- 
tion to  business,  and  incomes  derived  from  forms  of  investment 
which  call  for  little  exertion  on  the  part  of  the  owner  of  the  capital. 


I 


Taxation  aitd  Laitd  Valitm 


An  attempt  to  follow  up  this  distinction  to  some  extent  and  to 
make  the  relative  value  contributions  of  the  individual  and  of  the 
community  determining  factors  in  the  lev>-ing  of  taxes,  is  manifested 
in  the  arguments  for  the  so-called  singHe  tax  on  land  v.Jues.    It  is 
not  por<aible  within  our  space  to  pass  in  review  the  curious  medley  of 
half-tr  ths  and  more  largely   proportioned   misconceptions  in  the 
sphere  of  economics,  directed  to  the  philanthropic  object  of  a  uni- 
versal redemption  of  mankind,  morally,  socially  and  politically,  but 
argued  with  a  most  misanthropic  fervor  against  all  who  question 
the  validity  and  claims  of  the  system  set  forth.    The  fundamental 
principle  maintained  is  that  the  local  community  as  a  whole  con- 
tributes to  land  its  entire  economic  value,  while  other  economic 
values  are  derived  from  human  labor  and  enterprise.    This,  how- 
ever, is  contrarj-  to  obvious  facts,  it  being  evident  that  while  no 
values  can  exist  without  reference  to  the  needs  of  a  community,  to 
determine  what  proportion  of  human  effort  or  enterprise  must  co- 
operate with  these  neetls  to  furnish  articles  or  services  of  different 
values  is  a  very  complex  and  variable  problem,  and  it  is  as  variable 
in  the  case  of  land  as  in  the  case  of  many  other  articles.     Moreover, 
the  community  which  contributes  to  the  value  of  land,  especially 
its  speculative  or  exceptional  value,  is  a  community  some  of  whose 
most  influential  elements  reside  far  from  the  municipality  or  even  the 
state  or  province  which  would  exclusively  benefit  by  a  tax  levied 
upon  land  values  alone. 

Again,  the  claim  put  forward  that  the  single  tax  would,  on  the 
one  hand,  be  a  check  on  land  speculation,  and,  on  the  other,  bring 
into  the  civic  treasurj'  a  considerable  share  of  the  speculator's  gains, 
is  plainly  contrary  to  the  facts.  It  is  just  the  successful  speculator 
who  suffers  least  of  all  from  any  annual  tax  upon  land.  The  really 
successful  speculator,  as  evidenced  in  the  remarkable  history  of  land 
speculation  in  many  western  Canadian  towns  and  cities  during  the 
past  few  years,  holds  his  land  for  so  short  <\  period,  and  makes  such 
phenomenal  gains  on  his  sales,  that  no  annual  tax  on  land  can  do 
more  than  take  the  merest  fragment  of  his  profits.  On  the  other 
hand,  when  he  is  through  with  his  land  speculation,  having  accumu- 
lated fabulous  wealth  within  a  very  brief  period,  he  naturally  places 
it  other  and  safer  forms  of  permanent  investment.  There,  undar 
the  single  tax  system,  it  would  be  safe  from  the  tax  collector  to  whose 
perennial  v  its  the  speculator  leaves  his  latest  victims,  to  have  their 


4  Tta  AmtAM  oy  tb>  AitniCAM  Acadbit 

aeooouue  life  erutbed  between  the  milbtoneii  of  colkpeiiig  knd 
values  tnd  rising  tax  ntee. 

But  while  the  single  liuid  tax  contpicuoualy  faib  to  reavh  the 
pocket  of  the  aucceflsful  land  speculator,  there  is  no  one  whose  fins 
may  be  more  legitimately  laid  under  heavy  tribute  for  civic  needs. 
As  a  matter  of  fact  the  real  prices  of  land  befoine  and  after  a  land  boom 
plainly  indicate  that  much  the  larger  proportion  of  what  the  shrewd 
land  speculator  has  dealt  in,  under  the  guise  of  land  sales,  are  simply 
carefully  dressed  visions  of  sudden  wealth  to  be  obtained  by  the 
transfer  of  city  lots.  The  lots  themselves  may  have  little  permanent 
interest  for  either  party  to  the  apeculatior.  Those,  however,  who 
have  a  permanent  use  for  them  can  obtain  them  only  at  the  specu- 
lative nfr%  which  tliey  bear  as  counters  in  the  game  of  land  specula* 
tion. 

One  of  the  most  disheartening  features  in  the  long  period  of 
stagnation  and  slow  recovery,  which  follows  the  collapse  of  a  land 
boom  in  an  over-grown  and  over-built  city,  is  the  legacy  of  debt  and 
heavy  interest  charges  which  is  entailed  upon  the  unfortunate  citi- 
sens.  Indeed,  during  the  boom  period,  a  great  many  expenses  which 
should  have  been  met  from  the  annual  taxes  are  paid  out  of  the 
proceeds  of  loans.  After  the  boom,  however,  not  only  have  these 
charges  to  be  met  out  of  annual  taxes,  but  also  the  full  interest  on  the 
millions  borrowed,  as  well  as  many  repairs  and  minor  replacements 
rendered  necessary  by  imperfect  work  under  inadequate  supervision. 
Thus,  after  the  boom,  the  annual  taxation  may  be  considerably 
greater  than  during  the  period  of  flush  times  and  special  expenditure. 
The  interest  charges  alone  in  many  of  the  best  boomed  cities  in  Can- 
ada amount  to  from  one-fourth  to  one-third  of  the  annual  taxes.  If 
provision  is  being  made  for  a  sinking  fund,  the  proportion  is  of  course 
considerably  increased. 

Now  it  is  commonly  found  that  these  great  burdens  have  to  be 
borne  in  the  largest  measure,  especially  if  any  form  of  single  tax  is  in 
operation,  not  by  the  successful  speculators,  who  have  disposed  of 
the  greater  part  c  their  land  holdings,  but  by  their  unfortunate 
victims,  many  hom  are  forced  to  purchase  their  lands  for  resi- 

dence or  otner  permanent  uses  and  to  pay  for  them  the  boom  prices, 
which  could  not  be  subsequently  recovered. 

Obviously,  what  is  required  is  some  system  of  civic  taxation 
which  will  be  as  rapid  and  effective  in  operation  and  as  generous  in 


Taxatiok  and  IwufD  Valcm 


I 

I 


I 

r 


H*  levies  upon  exceptknuil  r'^oftti  m  are  the  operttione  and  the  g^T 
of  the  succeaeful  land  ■pecolatcr.  Clearly  abo  this  wiU  not  he  the 
slow  biennial  system  of  taxation,  which  sssriniii  the  property  one 
jrear  and  collects  the  taxes  the  toUowing  year.  Dunng  this  time,  in 
cases  of  the  really  tjrpical  civic  boom,  such  as  we  have  had  in  numer- 
ous towns  and  cities  in  both  the  United  States  and  Canada,  the  prop- 
erty may  have  changed  hands  scores  of  times;  often,  in  single  trans- 
fers, at  an  increase  in  value  anywhere  from  25  to  100  per  cent,  or  more. 
Nor  can  effective  taxation  of  the  speculator  have  reference  to  any 
rental  value  of  the  properties  dealt  in,  rental  valu ;  being  praet>'  ."y 
non-«xistent  during  a  civic  boom.  It  must  be  a  system  whi<  ■>.  p; . 
vides  for  an  automatic  tax  levy  at  every  legal  transfer  of  th  !)-">* 
erty,  and  which  collects  the  taxes  from  the  purchaser  as  part  oi  the 
price  wh-  'h  he  has  agreed  to  pay  for  the  land.  Moreover,  the  levy 
must  incrc  dse  in  percentage  as  the  scale  of  profit  increases,  thus 
strictly  following  the  central  principle  of  taxing  according  to  ability 
to  pay. 

Such  a  system  of  taxation,  however,  and  the  application  of  the 
proceeds  thereof,  must  be  entirely  distinct  from  the  system  of  annual 
taxation  required  to  meet  the  current  needs  of  the  municipalities. 
The  situation  involves  a  sharp  distinction  between  two  forms  of  civic 
expenditure.  First,  we  have  the  expenditure  which  provides  for  the 
regular  annual  needs  of  the  citizens  under  normal  conditions  of  civic 
life.  Secondly,  we  have  the  capital  expenditure,  quite  irregular  as  to 
the  -Periods  of  the  outlay,  but  wlich  is  ca'  "i  f«>r  in  furnishing  a  city, 
frequently  all  at  one  time,  with  a  v/ell  equi .  i  plant  or  seresof  plants 
to  meet  the  modem  needs  of  the  citizens  This  ia  distinct  from  the 
annual  expenditure  in  main'oinint;  ^nd  operating  the  plants,  and 
which  falls  within  the  scope  o(  auuual  revenue  and  expenditure. 
Thus  the  provision  r  ■■  ..'>.  adequai  »  vie  water  supply,  the  construc- 
tion of  a  well  plann<> '  >  stem  of  diainage  and  sewage  disposal,  the 
grading  and  paving  of  streets,  the  provisions  for  squares  and  parks, 
the  necessary  equipment  for  file  protection,  the  erection  of  public 
buildings,  such  as  civic  buildings,  schools,  etc.,  represent  a  very  great 
outlay  which  is  quite  independent  of  the  annual  expenditure  in  main- 
taining and  operating  these  civic  institution^.  At  present  this  capital 
outlay  is  provided  in  the  shape  of  huge  municipal  loans,  the  subse- 
quent interest  on  which  absorbs  from  one-fourth  to  one-third  of  the 
annual  taxes  in  many  Canadian  towns  and  cities. 


Thb  Annaub  of  the  Amsbican  Acadbut 


In  a  slowly  growing  city  these  expenditures  extend  over  a  very 
considerable  period  and  if  a  sinking  fund  is  provided  for,  it  may  be 
possible  to  secure  the  extinction  of  one  loan  on  capital  account  before 
another  requires  to  be  effected.  This,  however,  is  a  very  rare  experi- 
ence among  modem  cities  on  this  continent.  Many  towns  and  cities 
have  suddenly  grown  up  under  the  stir^ulus  of  a  speculative  fever  and 
have  been  forced  to  incur  enormous  debts  within  a  very  brief  period, 
and  their  capital  outlays  take  place  when  prices  and  wages  are  at  high 
water  mark.  This  means  that  the  capital  expenditure  is  coincident 
with  and  commonly  due  to  the  very  land  booms  which  furnish  such 
enormous  gains  for  the  successful  land  speculators. 

A  study  of  the  various  stages  in  the  growth  of  a  city  boom  reveals 
the  interesting  fact  that  once  the  future  city  is  launched  on  an  active 
period  of  expansion,  (a  movement  commonly  arranged  by  a  group  of 
shrewd  and  courageous  speculators  who  manage  to  attract  consider- 
able capital  from  outside  sources),  the  influx  of  population  which  ia 
attracted  soon  creates  more  work  for  itself  than  for  its  employers.  In 
other  words,  it  requires  more  workmen  in  the  building  and  allied 
trades  to  build  houses  to  accommodate  the  workmen  themselves  than 
are  required  to  erect  buildings  for  their  employers.  Further,  the 
incoming  army  of  workmen  provides  customers  for  a  large  body  of 
merchants  and  middlemen  and  their  employees  and  dependents,  who 
in  turn  nmst  all  be  provided  with  houses  and  places  of  business,  again 
augmenting  the  numbers  to  be  employed  in  the  building  trades. 
Another  class  of  citizens  must  provide  material  and  implements  for 
building,  and  for  the  equipment  and  furnishing  of  these  buildings. 
So  the  circle  continues  to  widen  through  agencies  of  every  kind, 
including  bankers,  lawyers,  doctors,  clergymen,  teachers,  with  all 
the  buildings  and  equipment  which  they  require  to  carry  on  their 
businesses  and  professions. 

At  the  head  of  this  procession,  the  original  apostles  of  faith  in 
indefinite  expansion,  stimulating  every  form  of  civic  expenditure  and 
of  private  and  corporate  investment,  are  the  shrewd  and  couragous 
land  speculators,  reaping  phenomena)  harvests  of  profit,  and,  as 
becomes  men  of  far-sighted  instincts,  not  envious  of  the  lesser 
prophets  who  follow  in  their  wake,  imitating  their  methods  and  fre- 
quently furnishing  them  with  customers. 

As  experience  indicates,  a  rapid  expansion  in  civic  debt  goes 
hand  in  hand  with  a  rapid  expansion  in  city  building  and  the  growth 


Taxation  and  Land  VAiiUBs 


of  population,  while  an  active  land  speculation  accompanies  and 
stimulates  both.  Now  all  that  is  required  to  transfer  a  large  pro- 
portion of  these  speculative  gains  from  the  rapidly  expanding  bank 
account  of  a  successful  land  speculator  to  the  cofTers  of  the  city 
treasury,  is  to  provide,  somewhat  after  the  plan  adopted  in  Britain, 
the  necessary  legal  authority  and  comparatively  simple  administra- 
tive  machinery.  Provision  ought  to  be  made  that  the  value  of  each 
piece  of  land  shall  be  assessed,  as  early  in  its  economic  career  as  pos- 
sible, at  its  actual  market  value.  Thereafter  at  the  period  of  each 
legal  sale  of  the  land,  when  the  buyer  pays  more  than  its  registered 
value  or  its  value  at  the  last  transfer,  a  certain  percentage  of  the 
increased  value  shall  be  first  paid  into  the  civic  treasury,  and  the 
remainder  to  the  seller  as  may  be  agreed  upon.  The  percentage  to 
be  thus  taken  by  the  municipality  shall  be  graded  according  to  an 
appointed  scale,  increasing  with  an  increase  in  the  rate  of  profit  and 
shortness  of  time  since  the  previous  sale.  The  price  at  which  each 
sale  takes  place  shall  be  registered  with  the  title  of  the  land  and  will 
thus  be  made  known  to  the  subsequent  purchasers  when  looking  up 
the  title.  The  registered  price  at  the  last  transfer  would  be  the  basis 
of  information  to  the  purchaser  as  to  what  proportion  of  the  price 
which  he  has  agreed  to  pay,  he  must  transfer  to  the  city,  and  what 
proportion  shall  be  paid  to  the  seller  of  the  land.  Take  a  hypothet- 
ical case: — A  purchaser,  who  found  that  the  price  which  he  had  agreed 
to  pay  for  a  piece  of  land  was  25  per  cent  more  than  the  seller  had  paid 
for  it  within  a  year  past,  might  be  required  to  pay  one-third  of  the 
increase  to  the  civic  treasury  and  the  remainder  to  its  seller.  If, 
however,  the  profit  received  were  50  per  cent,  then  he  might  be  re- 
quired to  pay  40  per  cent  of  this  profit  to  the  city,  and  so  on  according 
to  a  graded  scale,  until,  if  the  profit  were  200  or  300  per  cent,  he  might 
be  required  to  transfer  70  or  80  per  cent  of  it  to  the  civic  treasury. 
If,  however,  the  sale  took  place  not  within  the  year  but  two  or  three 
years  after  the  last  sale,  the  rate  should  be  diminished  according  to 
another  scale,  taking  into  account  interest  charges,  annual  taxation, 
improvements  on  the  land,  etc.,  which  would  tend  to  diminish  with 
time  the  profits  of  the  sale.  Again,  if  no  sale  should  take  place  within 
a  given  period  of  five,  or  possibly  ten  years,  the  property  should  be 
re-valued  and  a  percentage  of  the  increased  value  taken  on  the  same 
basis  as  to  the  rate  of  increase  and  duration  of  time  as  if  a  sale  had 
taken  place  at  the  close  of  the  period.    Under  this  system,  while  the 


8 


ThB  i\NNAL8  OF  THE  AMERICAN  ACADEMT 


aggregate  gain  to  the  speculator  would  stUl  amoimt  to  a  very  attrac- 
tive profit  on  his  investments,  the  share  coming  to  the  municipality 
would  automatically  keep  pace  with  the  rise  in  price,  and  the  rapidity, 
volimie  and  profit  of  the  land  sales. 

As  already  indicated,  this  form  of  taxation  is  intended,  on  the 
one  hand,  to  provide  for  special  capital  expenditures  and  not  for  an- 
nual revenues;  and,  on  the  other,  to  secure  a  reasonable  share  of 
the  special  profits  from  exceptional  increases  in  land  values,  especially 
during  short  periods.  One  of  its  chief  virtues,  from  the  point  of 
view  of  ability  to  pay,  is  that  it  taxes  high  profits  only  while  these 
profits  are  being  obtained,  and  especially  while  they  are  being  rapidly 
obtained.  When,  however,  speculation  ceases  and  values  remain 
stationary  or  decline,  this  special  tax  automatically  ceases  also.  It 
takes  nothing  from  any  purchaser  who  makes  no  profit  on  his  sales  or 
on  his  holdings.  It  is,  however,  during  such  periods  of  stagnation, 
when  the  various  municipalities  are  not  expanding,  that  their  capital 
expenditure  is  certain  to  be  correspondingly  light.  At  the  same  time 
the  annual  needs  will  be  met  by  the  annual  taxes  on  real  estate  and 
incomes,  above  a  certain  rate,  from  other  sources  of  invested  wealth 
or  personal  service. 

Certain  minor  details  would,  of  course,  require  to  be  considered 
in  bringing  such  a  scheme  of  taxation  into  general  operation;  but  the 
simple  and  direct  basis  of  the  tax,  the  important  purpose  which  it 
would  serve,  partly  in  checking  extravagant  speculation,  and  partly 
in  furnishing  an  indispensable  capital  fund  for  civic  equipment  just 
at  the  time  and  in  proportion  to  the  need  for  capital  outlay,  ought  to 
commend  it  to  the  practical  consideration  of  state  and  provincial 
governments  in  both  Canada  and  the  United  States. 


I 


THE  AMERICAN  ACADEMY  OF  POLITICAL 
AND  SOCIAL  SCIENCE 

Origin  and  PiupoM.  Th«  Academj  waa  organiied  December  14| 
1889,  to  pioflde  •  national  fonun  for  tlio  dtocnaalon  c!  political  and 
•odal  taeBtiona.  The  Acadenqr  doea  not  take  aidea  upon  controverted 
qneitlonat  but  aeeka  to  aecore  and  preaent  rellablo  Information  to 
aailat  flie  pabUe  In  forming  an  Intelligent  and  accorato  opinion. 

Publlcatlona.  The  Academj  pubUahea  annoalfy  aiz  Icanea  of  Ita 
•*Annala"  deaUng  with  the  aix  moat  prominent  current  eocial  and  poUt^ 
cal  problema.  Bach  publication  containa  from  twen^r  to  twenty-flvt 
papera  upon  the  aame  general  rabject  The  larger  nomber  of  flie 
papera  pnbllihed  are  solldted  hj  the  Academy;  they  are  aerlona  dl»> 
cnaaioni,  not  doctrinaire  expreaaione  of  opinion.  The  Academy  publi- 
cations, now  approaching  one  hundred  and  fifty  In  number,  give  the 
most  comprehenshre  account  anywhere  obtainable  of  the  potttical  and 
social  fueations  that  have  be«i  before  the  American  people  during 
the  paat  quarter  centuiy. 

Meetinga.  The  Academy  holds  five  sdentiflc  sessions  each  year 
during  the  winter  montba,  and  it  alao  has  an  annual  meeting  in  Apll, 
extending  over  two  full  days  and  including  aiz  sessions.  The  papers 
of  permanent  value  presented  at  the  meetinga  are  included  in  tfie 
Acadenqf  publieationa. 

Membership.  Membersh^  in  the  Academy  may  be  secured  by 
app^rlog  to  the  Secretary,  36th  Street  and  Woodland  Avenue,  Phila- 
delphia. The  membersh^  fee  is  S5.00;  life  membersh^  fee,  tlOO. 
Members  receive  all  the  regular  publications  ot  the  Academy,  are 
faivlted  to  attend  and  take  part  in  the  adentlfic  meetinga,  and  have 
the  privflege  of  applying  to  the  Publication  Board  for  bformation  upon 
current  political  and  social  questions. 


